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The influence of cross- and upselling on online sales

11-04-2016 Laurens Atsma

Anything else?’ the greengrocer asks, after you ordered a bag of green beans. You might think ‘that’s friendly!’, but at the same time it’s an opportunity for the grocer to increase his revenue. This is a known example of cross-selling, in other words: the marketing of products related to the product you - as a customer - are interested in. Also in e-commerce this type of product recommendations turn out to be successful for generating additional revenue. According to a study conducted by Forrester, cross- and upselling appears to be responsible for 10-30% of the total e-commerce turnover. This article will explain why cross- and upselling are important and how you can implement them in your webshop.


Upselling vs. cross-selling

Cross- and upselling are techniques implemented during sales in order to sell upgraded or complementary products to customers who are currently interested in a specific product. The terms are often used interchangeably, however, there is an important difference. This can be well explained with the following example.


Imagine, you are searching online for a new laptop. After selecting your favorite laptop, immediately you are presented with options to upgrade the processor. In that moment, the retailer is attempting to sell you a more powerful (and more expensive) computer. In fact, the retailer is trying to persuade you into spending more money on the same product you are currently viewing. This is a form of upselling.


After you have chosen a heavier processor during the ordering process you are directed to the next screen. Here you are presented the opportunity to add a mouse to your order. The computer mouse is a matching and logic accessoire you could buy with the computer; it’s related to the original product you are interested in. This is also known as cross-selling.


Higher revenue and better customer reviews

Well executed cross- and upselling techniques can lead to higher online revenue, and loyal and satisfied customers. After all, retailers sell more, whilst the customer is enjoying more/new offers in the form of necessary accessories. Eventually, a proper use of cross- and upselling techniques will therefore lead to more positive customer reviews of the webshop.


A frequent dilemma retailers encounter is the question whether to focus on up-selling, that is trying to sell more expensive, yet similar products. Or they should focus on selling additional products, so focussing on cross-selling? According to a study of upselling performs 20 times better than cross-selling. It should be mentioned that cross-selling is much more effective when presented on checkout-pages (so at the final moment, during pay off) than presented on product pages. As a result you will generate more impulse purchases. The study of Smart Focus shows that cross-selling can lead to 3% extra revenue.



The customer comes first

It is important to apply cross- and upselling in the right places within the purchasing cycle of the customer. From the moment non-related products are being presented along products the customer is actually looking for, a moderate click-through and conversion will occur. Making the purchase experience of the customer a negative one. Focussing on generating more revenue and increasing the average extent of shopping baskets is not always the best strategy. Therefore, especially think from your customer’s point of view and focus on the customer experience. A good method for this is writing down a customer journey map.


Conclusion

Always be tactful when cross- and upselling in your webshop. What we often see is that the retailer’s main goal for cross- and upselling becomes blurred. Never forget to think from your customer’s perspective. If you constantly show the same products or non-relevant products to your customers, then this will negatively influence your customer’s perception of your brand. Which could even lead to a decrease in total conversion. In order to avoid this from happening, carefully look at the products you are offering and determine what would be the most meaningful to offer your client at which moment. Then you are well on your way to increase the online revenue and conversion per visitor.



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